(Sec 274(m)(1) Business travelers who use cruise ships as a mode of transportation in carrying on their trade or business activities may generally find their deductions limited.  The per day deduction for this kind of travel can’t be more than twice the highest per diem amount allowed to Federal government employees for travel within the U.S.  That rate changes periodically during any year. IRS includes the rates annually in Publication 463. If the expenses for luxury water travel include separately stated meals or entertainment, the meals are subject to the 50% rule (2021 IRS Pub 496, page 9). Apply the 50% limitation before making the per diem limit, and per the TCJA of 2017, none of the entertainment costs is deductible.  If meal and entertainment charges are not separately stated (which is typically the case on cruise fare documents), or are not readily identifiable, the total charge for the travel does not need to be allocated.    

Exceptions: The limit does not apply to any expense allocable to a convention, seminar, or other meeting that is held on a cruise ship (Sec 274(m)(1)(B)(ii)) and the following expenses: Food and beverage for employees, expenses treated as compensation, reimbursed expenses, expenses for employees, items available to the public, entertainment sold to customers and expenses includible in income of persons who are not employees. (Sec 274(e)(2, 3, 4, 7, 8 and 9)